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**A PROJECT ON QUANTITATIVE METHODS FOR BUSINESS - II
**

Prepared ByGroup No 6

Assignment Problem

Q. A company has 4 machines on which to do 3 jobs. Each job can be assigned to one and only one machine. The cost of each machine is given in the following table:

JOBS MACHINES W A B C 18 8 10 X 24 13 15 Y 28 17 19 Z 32 19 22

SOLUTION:

**Step 1: Introduce a dummy row
**

JOBS MACHINES W A B C D 18 8 10 0 X 24 13 15 0 Y 28 17 19 0 Z 32 19 22 0

**Step 2: Subtract each element of row with the lowest element of that row
**

JOBS MACHINES W A B C D 18 8 10 0 X 24 13 15 0 Y 28 17 19 0 Z 32 19 22 0

JOBS

MACHINES W X 6 5 5 0 Y 10 9 9 0 Z 14 11 12 0

A B C D

0 0 0 0

**Step 3: Subtract each element of column with the lowest element of that column
**

JOBS MACHINES W A B C D 0 0 0 0 X 6 5 5 0 Y 10 9 9 0 Z 14 11 12 0

JOBS

MACHINES W X 6 5 5 0 Y 10 9 9 0 Z 14 11 12 0

A B C D

0 0 0 0

**Step 4: Draw minimum number of lines covering all the zeros.
**

JOBS MACHINES W A B C D 0 0 0 0 5 0 X 6 5 Y 10 9 9 0 Z 14 11 12 0

**Step 5: Number of lines drawn is less than the order of matrix
**

JOBS MACHINES W A B C D 0 0 0 5 X 1 0 0 0 4 0 Y 5 4 Z 9 6 7 0

**Step 6: Since the number of lines drawn is equal to the order of matrix
**

JOBS MACHINES W A B C D 0 0 0 9 X 1 0 0 4 Y 1 0 0 0 Z 5 2 3 0

JOBS

MACHINES W X 1 0 0 4 Y 1 0 0 0 Z 5 2 3 0

A B C D

0 0 0 9

JOBS

MACHINES W X 18 0 0 9 0 4 0 1 13 Y 1 0 19 Z 5 2 3 0

A B C D

The optimal assignment is JOBS A B C TOTAL MACHINES COST W X Y 18 13 19 50

Financial Mathematics - I

Q. Mr. Shahid has Rs. 10,000 and wants to invest his money for 5 years to earn higher returns on it. The bank provides interest at the rate of 10% p.a. He is given a choice between two types of interest, which will he choose (where interest is compounded quarterly)?

SOLUTION: Here,

Principal (P)

= Rs.10,000

Rate of interest(r) = 10% = 0.10 Number of years (n) = 5 years

In Case of Simple Interest: Simple Interest = P*n*r = 10000*5*0.10 = 5000 = Principal + S I = 10000 + 5000 = 15000

Amount Realized (A)

... Amount Realized = Rs. 15,000

In Case of compound interest: Number of times interest compounded (m) = 4 ... Amount Realized (A) = 10000 (1+0.10)4*5 4 = 10000 (1+0.025) 20

... Amount Realized (A) = 10000 (1.025)20 Let x = (1.025)20

Taking log on both the sides, ... log x = log (1.025)20 log x = 20.log (1.025) log x = 20 (0.0107) ... log x = 0.214

Taking antilog on both the sides, antilog (log x) = antilog (0.214) ... X = 1.637

** Amount Realized = 10000 * (1.637)
**

... Amount Realized = Rs. 16,370

Type of Interest

Principal plus interest earned

Simple Interest = 10,000 + 5,000 = 15,000 Compound Interest = 10,000 + 6,370 = 16,370

Q. What effective rate will be stated if an amount is deposited in a bank for 1 year which yield an annual rate of 6% when compounded semi-annually?

SOLUTION: Here, Rate of interest (r) = 6% = 6 = 0.06 100 Number of times interest compounded (m) = 2 Number of years (n)= 1

Since, Effective Rate (re) = ( 1+ r )m - 1 ... re = (1+0.06/2)2m-1 = (1+0.03)2-1 ... re = (1.03)2 -1 = 1.0609 – 1 = 0.0609

**Converting into percentage,
**

re = 0.0609 * 100 ... re = 6.09 %

... The Effective Rate is 6.09%

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